On October 17, 1998, H.R. 3616, the Fiscal Year 1999 Defense
Authorization Act was signed by the President and became law.

Among the measures contained in the law is a provision,
authored by Congressman Duncan Hunter (R-CA), denying the President the authority to issue
a waiver allowing the China Ocean Shipping Company (COSCO) to lease a terminal at the
former Long Beach Naval Station.

According to a report by the House Task Force on Terrorism,
"Although presented as a commercial entity, COSCO is actually an arm of the Chinese
military establishment. COSCO provides services to the logistics and and transportation
arms of the PLA's [People's Liberation Army] Navy and Air Force."

The Task Force also found that "COSCO is purchasing,
under a commercial cover, both cargo ships and, more recently, transport aircraft the PLA
cannot purchase for military uses. . . COSCO ships serve as a vehicle for the
transportation of strategic material to allies of the PRC is support of their strategic
programs -- development of ballistic missiles, nuclear weapons, chemical and biological
weapons. COSCO not only carries military and strategic cargoes from the PRC and North
Korea to such countries as Pakistan, Iran and Syria -- but also carries strategic items
and materials illegally purchased in Western Europe to these countries while concealing
the ultimate destination."

This new law was necessary because a previous law (which was
also written by Rep. Hunter) was weakened by a compromise with the Senate which allowed
President Clinton to issue a national security waiver allowing COSCO to take over the
terminal.

A civil suit filed by a group of concerned Californians may be
the only remaining hope for keeping the Long Beach Naval Station out of Communist Chinese
(COSCO) hands. Clinton lobbied hard for Chinese interests sending an economic advisor to
pressure Long Beach officials to go forward with the COSCO deal. This came after the
president, a beneficiary of China's campaign largesse, entertained one of COSCO's top
officials and invited him to a White House radio address, reports The Washington
Times/INSIGHT Magazine.

Senate Democrats recently defeated the Hunter-Inhofe amendment
to the Defense Authorization Bill, which would have prevented COSCO from leasing the Long
Beach port. But Sen. James Inhofe (R.-OK), syas he is far from finished. While the bill
passed overwhelmingly in the House, it needs some revision to pass the Senate. Recently
Inhofe set up a committee to find a way to advance the bill. Inhofe's press secretary,
Gary Hoitsma, says of the measure: "It's not dead yet. We're pushing along."

Insight has found that many of the Long Beach citizens are not
buying a Defense Department analysis that claims COSCO poses no threat contrary to the
advice from military and intelligence experts who fear that Chinese intelligence agents
will increase their surveillance of U.S. military activities. Considering the FBI is now
investigating some 450 cases involving Chinese espionage, a potential spy nest in the port
is not something law enforcement agents are looking forward to.

On June 4, 1998, RNC Chairman, Jim Nicholson, called on
President Clinton to refuse to allow Chinese government-run China Ocean Shipping Company
(COSCO) a lease on Long Beach Naval Station in California because of COSCO's long record
of trafficking nuclear weapons materials and other artillery.

President Clinton signed a law in 1997 to prohibit transfer of
Long Beach property to COSCO or any of its subsidiaries without a presidential waiver.
"The United States should not be a layover for China's arms deals," said
Nicholson. "Long Beach Naval Base is in a very strategic location for wartime
activities. President Clinton should not allow COSCO, an arm of the Chinese military
estab;ishment, to control their own terminal at Long Beach."

The Port of Long Beach is seeking to lease a terminal on the
old naval base at Long Beach; such control would be unprecedented. In addition, the Mayor
of Long Beach asked President Clinton to sign a waiver to allow the lease.

Nicholson added "China has 13 nuclear-tipped missiles
pointed at the United States. Are we going to allow them to have control of a California
seaport as well?

"President Clinton said last week that 'our partnership
with China has persuaded the Chinese not to transfer missile technology and other
dangerous materials to nations that we believe should not have them.' Apparently he
doesn't know about COSCO's track record, or he doesn't care about it."

In the next week or two the U.S. Senate will vote on an
amendment to the Defense Appropriations bill which would bar the transfer of the Long
Beach Naval Station to the Chinese Communist government's shipping company, COSCO. COSCO
previously made news when one of its ships was intercepted off of the coast of California
with thousands of fully automatic AK-47's which were destined for sale to the street gangs
of Los Angeles. President Clinton and Sen. Diane Feinstein (D-CA) have been enthusiastic
proponents of the transfer of this base to COSCO. Rep. Duncan Hunter (R-CA) introduced an
amendment on the House bill which has been passed. Sen. James Inhofe (R-OK) introduced an
identical amendment in Committee in the Senate which was killed by Sen. Carl Levin. (If
both the House and the Senate pass identical language, the issue can not be
"conferenced" and changed before final passage.) Sen. Inhofe intends to
introduce his amendment on the Senate floor when the bill is up for debate in the next
week or two.

When Sen. Abraham visited East Tawas on May 29, he indicated
that he was not sure of the status of the Inhofe Amendment, but indicated that he had
introduced legislation which would restrict the ability of the Chinese to do business in
or with the U.S.A. if they were found to have violated any U.S. law. If you wish to
express your opinion to either or both of our Senators, you can call the Capitol toll-free
at 1-800-504-0031. Sen. Abraham's aide who services this area is Chris Pavelich and can be
reached at (517) 7522-4400, FAX (517) 752-4492. Sen. Abraham recommended contacting Chris
for best service.